G4S to pay £88m bill for Olympics security fiasco after hammering out deal with Locog

G4S's bill for the Olympics security debacle tots up to £88million following months of wrangling with Games organisers Locog.

The firm will suffer a £70million loss on its bungled contract - up from its previous estimate of £50million - while additional costs such as charitable donations, sponsorship and marketing amount to £18million.

Boss Nick Buckles, who has come in for heavy criticism over the Olympics staff shortfall, said: 'Whilst we are extremely disappointed to find ourselves in this position, we are pleased to have concluded these negotiations with Locog.

Olympics contract: Private security guards from G4S secure the entrance to Alexander Stadium, the US athletics team training camp for the London 2012 Olympic Games

'The UK Government is an important customer for the group and we felt that it was in all of our interests to bring this matter to a close in an equitable and professional manner without the need for lengthy legal proceedings.'

The two sides have been in talks over a final settlement for the £240million security contract after G4S failed to provide all of its 10,400 contracted guards last summer.

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The Government was forced to draft in the police and army at short notice just before the Games.

Two G4S directors resigned in the wake of an independent review into the company's botch-up, which saw it only fulfill 83 per cent of contracted shifts.

Chief operating officer David Taylor-Smith and head of global events Ian Horseman Sewell carried the can, but Buckles stayed in his post.

Locog said the taxpayer's interests were fully protected in compensating for the difficulties experienced by G4S's shortcomings.

Its chief financial officer Neil Wood said the overall agreement reduced the payment due to G4S by £85million, comprising £48million to cover step-in costs by police and military and £37million primarily for project management failures.

He added: 'The savings arising from this settlement brings the total savings to the public purse from the Locog venue security budget to £102million compared to the position in December 2011.'

G4S shares were up 0.25p at 280.55p in afternoon trading.

Income shares watch: G4S froze its half-year dividend at 3.42p. The shares yield 3.32 per cent.

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Caroline de La Soujeole, an analyst at Cantor Fitzgerald Research, said the total cost of £88million was better than her estimate of between £100million and £110million.

She added: 'In our view this draws a line under the Olympics situation and will enable the company to win more Government outsourcing contracts.'

Stock watch: G4S shares have almost recovered from losses seen immediately following the Olympics debacle